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Sunday, January 1, 2017

ORGANIZATIONAL CONFLICTS OF INTEREST (OCI) IN SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING

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INTRODUCTION

While planning, marketing, teaming, proposing or performing under federal government programs (particularly service contracts) the small business will encounter the term, "Organizational Conflicts of Interest" or "OCI". The term has been established by the government as part of the process to control procurement integrity.

OCI clauses in solicitations and contracts require that companies certify their organizations and personnel as not having a procurement integrity issue with regard to a pending contract award or disclose what may be deemed an issue and provide mitigating factors to still be considered.

This site has discussed procurement integrity and the law at the following article:

An apparent win can be delayed indefinitely by a competitor protest claiming OCI. Government actions after the fact if an OCI violation is uncovered will be annotated to a contractor's past performance history and in severe cases result in disbarment from government contracting.

This article will define Organizational Conflict of Interest (OCI), discuss situations under which OCI issue are likely to occur and recommend strategic planning and processes to manage the requirement.

DEFINITION

The term "organizational conflicts of interest" means that a relationship or situation exists whereby an offer or a contractor has past, present, or currently planned interests that either directly or indirectly (through a client, contractual, financial, organizational or other relationship) may relate to the work to be performed under the forthcoming contract and:

It includes chief executives and directors, to the extent that they will or do become involved in the performance of the contract, and proposed consultants or subcontractors where they may be performing services similar to the services provided by the prime contractor.

It does not include the normal flow of benefits from the performance of the contract.

EXAMPLES

1. Competing for a management/services contract that might require the contracting company to evaluate its own or its competitors’ products for use by the government

2. Competing to supply products/services for which you have designed the specifications

3. Access to other companies’ proprietary information that has not been authorized for use in landing/performing the contract

4. Access to other companies’ proprietary information obtained by leveraging the contract in question, which might provide an unfair competitive advantage.

The below article in the Washington Post addresses an apparent blatant example of OCI:

Below are exampes of typical representation certifications and disclosure statements required by OCI regulations. For a given procurement either the Representation or the Disclosure is submitted - not both:OCI REPRESENTATION STATEMENT

I hereby certify (or as a representative of my organization, I hereby certify) that, to the best of my knowledge and belief, no facts exist relevant to any past, present or currently planned interest or activity (financial, contractual, personal, organizational or otherwise) which relate to the proposed work; and bear on whether I have (or the organization has) a possible conflict of interest with respect to (1) being able to render impartial, technically sound, and objective assistance or advice; or (2) being given an unfair**competitive advantage.

Signature: Date:

Name : Organization:

Title :

OCI DISCLOSURE STATEMENT

I hereby certify (or as a representative of my organization, I hereby certify) that, to the best of my knowledge and belief, all relevant facts--concerning past, present or currently planned interests or activities (financial, contractual, organizational or otherwise) which relate to the proposed work and bear on whether I have (or the organization has) a possible conflict of interest with respect to (1) being able to render impartial, technically sound, and objective assistance or advice, or (2) being given and unfair**competitive advantage--are fully disclosed on the attached page(s) and formatted to show:

o For ease of presentation, divide following data into four parts: Organizational,contractual, financial, other;

o The company, agency, organization in which you have a past, present, or currently planned interest or activity (financial, contractual, organizational, or otherwise);

o A brief description of relationship;

o A period of relationship;

o The extent of relationship (e.g., value of financial interest of work; percent of total holdings, total work, etc.).

Signature:

Date:

** An unfair competitive advantage does not include the normal flow of benefits from the performance of the contract.

STRATEGIC MANAGEMENT FACTORS

When considering the implications of OCI, examine your strategic plan for the following factors:

1. Examine your market niche and what aspects of it would be subject to OCI as a function of your company role in it or the roles of past and future personnel and suppliers or prime contractors.

2. If you are considering becoming a SETA contractor determine what portion of the market in your industry will be unavailable to you in that role. Systems Engineering and Technical Assistance (SETA) contractors are civilian employees or government contractors who are contracted to assist the government (In some areas of DOD, the acronym SETA refers to "Systems Engineering and Technical Assessment" contractors; also refers to "Systems Engineering and Technical Analysis.") SETA contractors provide analysis and engineering services in a consulting capacity, working closely with the government's own staff members. SETA contractors provide the flexibility and quick availability of expertise without the expense and commitment of sustaining a government staff long-term.

3. Bear in mind that non-disclosure agreements and OCI requirements for major programs have long term implications and expiration dates.

4. Keep in mind that subcontractor and prime contractor relationships also bear on OCI. Vet your prospective teaming companies and suppliers carefully with regard to the OCI impact they may have on ventures you undertake and flow the requirement down to them in the early stages of any teaming agreement with them.

5. Carefully consider the following guidance from FAR Part 9.505:“Each individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract. The exercise of common sense, good judgment, and sound discretion is required in both the decision on whether a significant potential conflict exists and, if it does, the development of an appropriate means for resolving it. The two underlying principles are—(a) Preventing the existence of conflicting roles that might bias a contractor’s judgment; and(b) Preventing unfair competitive advantage. In addition to the other situations described in this sub-part, an unfair competitive advantage exists where a contractor competing for award of any Federal contract possesses — Proprietary information that was obtained from a Government official without proper authorization; or Source selection information (as defined in 2.101) that is relevant to the contract but is not available to all competitors, and such information as would assist that contractor in obtaining the contract.”

CONCLUSION AND RECOMMENDATIONS

If a potential for a conflict of interest is real, it is best to make that fact a principal factor in your bid/no bid decision.

If you feel the risk could be mitigated and an effective OCI management plan could be submitted as part of your proposal to the government then carefully establish how such practical matters as firewalls, OCI certifications and clearances at the individual worker level will be handled.

Keep careful records of all written certifications and commitments in the form of NDA's, Teaming Agreements and OCI Certifications and Disclosures. Review them on a regular basis for renewal, expiration and in connection with bid/no bid decisions.

Be open and honest in your presentation of the facts to the government. Your past performance rating will take a major hit if OCI is uncovered after award and you have not made full and open disclosure previously.

3 comments:

How can we combat the abuse of OCI provisions in software development activities?

The idea that the company to specify software is not the company to build software is anti-agile. That is, it repudiates the best methods in software development.

Clause 9.505-2(a)(3)attempts to address the problem, but this seems to be rarely understood, and applied after the fact. That is, rather than rationally approach software as a continuous activity, this is used when program office finds itself faced with having to continue work already started.

A better explanation of the insidiousness of this problem is found here:http://www.softwareinsanity.com/2012/09/oci-nixes-ci.html